Larkins v. Boyd , 205 Ga. 69 ( 1949 )

1. By reason of the relationship of principal and agent existing between the parties, the petitioners in this case had a right to expect a full revelation of all pertinent facts which might jeopardize their rights in the property entrusted to the defendant, and the failure to reveal such facts by the defendant amounted to such fraud as would extend the right of the petitioners to bring an action to recover their property at any time within a period of seven years after the discovery of the fraud.

2. There is nothing in the petition to show any delay on the part of the petitioners in bringing the action, after the discovery of the fraud of their agent, which would render the ascertainment of the truth more difficult, and the ground of the demurrer which contends that the petition is barred by laches is without merit.

3. Whether or not the contract in this case as originally made was within the statute of frauds (Code, § 20-401), it now clearly falls within the exceptions to the provisions of such statute, as set forth in divisions 2 and 3 of the Code, § 20-402.

4. The contention that the contract between the parties was without consideration is without merit.

5. Other grounds of demurrer, not specifically dealt with, are without merit.

6. The petition stated a cause of action, and it was not error to overrule the demurrers of the defendant.

No. 16505. FEBRUARY 16, 1949. REHEARING DENIED MARCH 16, 1949. Mamie Futch Boyd and James Futch filed their equitable petition against Nettie Larkins. The petition, as amended, in substance alleged: The petitioners were the owners and in possession of described property. In September, 1938, the petitioners entered into a solemn agreement with the defendant, by the terms of which the defendant would act as their agent for the purpose of taking over such property, renting it, collecting rents, and paying taxes, accrued or that might accrue, until such time as the petitioners would return and have an accounting with their agent, the agent to receive a reasonable commission for her services. The defendant accepted the employment as agent with knowledge that there were delinquent taxes due at the time. The premises were delivered to the agent for the purposes set forth. She accepted the property under the terms of the agreement and has been continuously in possession of it, renting it and collecting the rents therefrom, from the date of the agreement to the filing of the petition. From time to time they remitted to the defendant various sums of money for the purpose of keeping the taxes paid and making repairs; and during the time the defendant has been in possession of the property she has collected rents of $797. In August, 1940, there were delinquent taxes of $76 due to the State and county, inclusive of the year 1939, and at that time the defendant had in her possession a sum of money from rents in excess of the $76 with which to pay the taxes, but the defendant failed to do so, and the property was sold and bid in by Thomas County for $76. Thereafter the defendant redeemed the property, paying the sum out of rents in her possession, and a deed was made by Thomas County to the petitioners, which deed the defendant has not had recorded. In 1940 there were delinquent taxes, due the City of Thomasville, of $93.05. In August, 1940, the city sold the property for delinquent taxes, at which time the defendant had in her possession $69.05 (received from rent of the property). The defendant permitted the property to be sold, and at the sale bid it in in her own name and acquired a deed thereto, which she did not have recorded, but concealed it, until August, 1947, when she caused it to be entered upon the deed records. After taking the deed in her own name, the defendant returned the property for taxation for the years 1941 and 1942 as the property of the petitioners, and thereafter returned the property for taxation in her own name. The petitioners had no notice, knowledge, or reason to suspect that this property had been sold for the delinquent taxes due the City of Thomasville until the recording of the tax deed in 1947. Upon discovering the fraudulent conduct of the defendant, they demanded a statement and settlement of their accounts with her, and that she deliver the property to them. At the time the petitioners discovered that the defendant held a tax deed from the City of Thomasville, the defendant had in her possession, unaccounted for, rents from the property, together with advances made by the petitioners, in the sum of $496.36. The defendant has paid all taxes on the property since 1940 out of rents accruing from the property, and has been reimbursed out of such rents for all delinquent taxes paid by her; and after deducting all delinquent taxes and current taxes, the defendant has in her possession from rents of the property $496.36. An itemized statement, as "Exhibit A," is attached, showing the amounts alleged to have been collected as rents and the amounts expended in the payment of taxes. Demand has been made on the defendant to surrender and deliver up for cancellation the tax deeds that she has acquired to the property, which she has refused to do. The defendant has converted to her own use the proceeds arising from the rent of the property, and is now liable to account for all rents and profits since she obtained possession of the property. She has not taken any steps to perfect the tax deeds under which she claims, as required by law. The petitioners stand ready to give effect to any and all equitable rights of the defendant with relation to the property as may be determined by the court. In view of the facts alleged, the defendant is holding the property in trust for the petitioners, and the tax deeds held by the defendant do not convey title to her, either legal or equitable, as against the petitioners. The deeds are a cloud upon the petitioners' title and should be delivered up and canceled.

The prayers were: for process; that the defendant be enjoined from interfering with the possession of the property by the petitioners; that the tax deeds be declared null and void and canceled as a cloud upon the petitioners' title; that title to the property be decreed in the petitioners; and that they have an accounting for all rents and profits coming into the hands of the defendant since she took possession of the property; for the appointment of a temporary and permanent receiver; that the defendant be enjoined and restrained from encumbering the property; and for other and further general relief.

The demurrers to the petition as amended were overruled, and the exception is to that judgment. 1. Counsel for the plaintiff in error (defendant in the court below, and hereinafter called the defendant) contends in his brief that an action to cancel a deed must be brought within seven years, that more than seven years elapsed between the date of the execution of the deed and the filing of the petition and that the action is therefore barred.

If the sole question is one as to the length of time which has elapsed between the accrual of the right and the institution of the action, the question as to whether or not the action is barred would be one of law; but where there are facts involving fraud and excuses for delay in discovering the fraud, the question becomes one of mixed law and fact, and is a proper question for determination by the jury under instructions from the court. See Hickson v. Bryan, 75 Ga. 392; Morris v.Johnstone, 172 Ga. 598, 605 (158 S.E. 308).

The relation alleged to exist between the petitioners and the defendant is that of principal and agent. This relation arises when one person authorizes another to act for him, or subsequently ratifies the acts of another in his behalf. Code, § 4-101. Existence of an agency may be established by proof of circumstances, apparent relations, and conduct of the parties.Cable Company v. Walker, 127 Ga. 65 (56 S.E. 108). The petition in this case alleges sufficient facts, if proved to the satisfaction of a jury, to establish the relation of principal and agent between the parties.

The relationship of principal and agent is a confidential one, and may arise where one party is so situated as to exercise a controlling influence over the rights or interest of another, or it may arise upon a relation of mutual confidence, and in every instance the law requires that there be the utmost good faith between the principal and the agent. Code, § 37-707. Good faith by the agent in this case would have required a full communication of the facts relating to the sale of the property of the petitioners for taxes, and concealment of such facts per se amounted to actual fraud. Poullain v. Poullain, 76 Ga. 420,421.

In Kirkley v. Sharp, 98 Ga. 484, 489 (25 S.E. 562), this court quoted with approval from Vigus v. O'Bannon,118 Ill. 334, as follows: "The rule that, in cases of fraud, the statute of limitations begins to run only from the time of the discovery of the fraud, will not apply where the party affected by the fraud might, with ordinary diligence, have discovered it. But the failure to use such diligence may be excused where there exists some relation of trust and confidence, as principal and agent, . . between the party committing the fraud and the party who is affected by it, rendering it the duty of the former to disclose to the latter the true state of the transaction, and where it appears that it was through confidence in the acts of the party who committed the fraud that the other was prevented from discovering it."

It has been held by this court that the relation of principal and agent is a fiduciary one, and that the agent may not make a profit for himself out of the relationship, or out of knowledge obtained from the relationship, to the injury of the principal. See Code, § 4-205; Forlaw v. Augusta Naval Stores Co.,124 Ga. 262 (52 S.E. 898); Stover v. Atlantic Ice CoalCorp., 154 Ga. 228 (113 S.E. 802). Under the allegations of the petition in the present case, the agent proposes to procure the property of the principals for her own benefit by reason of her neglect of her duties, on the one hand, and by her concealment of essential information from the principals, on the other. By reason of the relationship of principal and agent, the principals in this case had the right to expect a full revelation of all pertinent facts which might jeopardize their rights in the property entrusted to the agent; and the failure to reveal such facts by the agent amounted to such acts of fraud as would extend the right of the petitioners to sue and recover their property at any time within a period of seven years after the discovery of the fraud. Morris v. Johnstone, supra; Jones v. Johnson,203 Ga. 282 (46 S.E.2d 484).

The above ruling disposes of the contention of the defendant that the action is one upon open account, which would be barred after a period of four years.

2. The defendant contends that the action of the petitioners is barred by laches. Code, § 37-119. There is nothing in the petition by which any neglect on the part of the petitioners, after their discovery of the fraud of their agent, could even be inferred, nor is there anything to show how or wherein the ascertainment of the truth is made more difficult by any delay of the petitioners in the filing of their action.

All actions respecting the title to land shall be brought in the county where the land lies. Constitution, art. 6, sec. 14, par. 2 (Code, Ann., § 2-4902). In this instance the land is alleged to be located in Thomas County. All records pertaining to the matters of taxation and sale of the lands are presumed to be in Thomas County, and it is not shown that any party or essential witness is dead, or incapacitated from testifying from any cause. The contention that the action is barred by laches is without merit.

3. It is contended that the alleged contract is unenforceable because it violates the statute of frauds. Whether this contention be based on the requirement that a contract for the sale of lands, or any interest in, or concerning them, must be in writing, or upon the prohibition against oral agreements not to be performed within one year from the making thereof, it is without merit. The petitioners complied with their part of the agreement and delivered possession of the property to the agent. The agent accepted possession and the duties imposed upon her as agent, and for a period of time, under the allegations of the petition, performed the duties imposed upon her by the agreement establishing the relation of principal and agent. Thereafter the agent deviated from the original contract, neglected to perform her duties as agent, and fraudulently concealed material information from the principal. Whether or not the contract as originally made was within the statute of frauds (Code, § 20-401), it now clearly falls within the exceptions to the provisions of such statute, as set forth in divisions 2 and 3 of the Code, § 20-402.

4. It is contended that the contract or agreement between the parties was without consideration and therefore void. Independently of any allegation in the petition that the agent was to receive a reasonable compensation for the services rendered, the law will presume that, where one performs services valuable to another, a reasonable compensation is contemplated, and shall be paid. Code, § 3-107. Cases cited in the briefs of counsel for the defendant, to the effect that specific performance of a contract for the sale of lands will not be decreed where any of the provisions of the contract are indefinite or uncertain, or the consideration is inadequate, are not in point.

5. The foregoing disposes of the questions raised by the demurrer and argued in the brief of counsel for the defendant. It is stated in the brief that all grounds of the demurrer "were insisted upon . . in the trial court, and all of them are now urged and insisted upon in this court." Grounds of demurrer not argued by counsel have been examined and are without merit.

Judgment affirmed. All the Justices concur.